the role of microfinance in empowerment:...

Volume 4, Number 3, July – September’ 2015

ISSN (Print):2279-0934, (Online):2279-0942

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THE ROLE OF MICROFINANCE IN EMPOWERMENT:

THE CASE STUDY AT HALDHARU REGION, BARDOLI

Dhara Patel41

ABSTRACT

To understand microfinance as a supporting tool for empowerment. To promote self-sufficiency and development among the

people. Increased asset creation and savings, higher employment and improved social lives of members. To provide a range of

quality financial services through the empowerment. By going through this study I came to know that the indicator of “power”

element in which ability to challenge societal power relation ranks first followed by sub-indicator of the ability to take

decision at the household while ability to control source of power ranks the third. In indicator of building of awareness and

capacity in which legal and political awareness ranks the first followed by the sub-indicator of action to bring gender equality

and ability to participated in non-family group ranks third while the ability to manage productive resources ranks fourth and

so on. Overall microfinance plays important role in empowerment.

KEYWORDS

Microfinance, Empowerment, Building Awareness etc.

INTRODUCTION

The history of micro financing can be traced back as far as the middle of the 1800s, when the theorist Lysander Spooner was

writing about the benefits of small credits to entrepreneurs and farmers as a way of getting the people out of poverty.

Independently of Spooner, Friedrich Wilhelm Raiffeisen founded the first cooperative lending banks to support farmers in rural

Germany. The modern use of the expression "micro financing" has roots in the 1970s when organizations, such as grameen Bank

of Bangladesh with the microfinance pioneer Muhammad Yunus, were starting and shaping the modern industry of micro

financing. Another pioneer in this sector is Akhtar Hameed Khan. According to oxford dictionary, microfinance is defined as ―A

world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality

financial services, including not just credit but also savings, insurance, and fund transfers.‖

The idea behind the microfinance is generated appropriate change in financial systems all over the world. As the traditional

financial system provided benefits and safety to the rich segment of the society, the main object of microfinance is to lift the poor

segment of the society from the circle of poverty and able them to contribute and participate in the economic activities and

development.

Microfinance in India

The Indian microfinance industry would cross 11crore borrowers and Rs 1, 35,000crore ($30 billion) in loan portfolio by 2014

and will require a huge capital inflow in both debt and equity. They have put the total estimated demand for micro-credit in India

at $ 51.4 billion (Rs. 2, 40,000crore). There is a huge demand for Microfinance in India. The poor continue to lack access to

formal credit and are mainly relying upon informal sources to meet their needs. Microfinance Institutions (MFIs) are trying to

bridge the gap between demand and supply. The Indian states, including Bihar, Uttar Pradesh and West Bengal, have 421 million

―poor‖ people, the study found. This is more than 410 million poor in the poorest African countries, it said. Thus, the demand for

microfinance services – savings, credit and insurance – is apparently insatiable in India. In that sense, India is perhaps the largest

emerging market for microfinance services. Improvement in GDP has become essential for Indian economy for survival purpose

and in this case, the best answer would be the MFIs, which serve the purpose with the best intention. ―SEWA‖ in Gujarat, SHARE

and BASIX in Southern India have convinced to the public at mass that with such institution real services reaches to the Indian

economy for upliftment and for betterment. NABARD‘s SHG- Bank linkage program also provides the ―largest microfinance

network in the world‖. Many politicians also give emphasis that with such MFIs eradication of poverty has become possible.

Andhra Pradesh CM Shri Chandrababu Naidu also favours it and adopts it in its political agenda.

Empowerment

Empowerment literally means making someone powerful; facilitating the weak to strength, enabling someone to confront injustice

and oppression. Empowerment is a process, which makes the powerless to acquire and control over power through awareness,

41Assistant Professor, Uka Tarsadia University, Gujarat, India, [email protected]

mailto:[email protected]





capacity building, participation in decision-making, acquiring information, attaining confidence and self-employment. In this

study, some indicators were measure, which is given below:

Table-1

Sources: Authors Compilation

LITERATURE REVIEW

Ana Marr (2002) studied that group dynamics have been largely neglected when the impacts of microfinance on poverty reduction

are assessed. The study presents an analytical framework in which the study of group dynamics was central, and new channels of

impact effects on the individuals participating in microfinance schemes, their households, enterprises and communities are

assessed. Four potential outcomes of this fresh approach to the analysis of poverty impacts were argued; they may have dramatic

implications for the way we look at the effectiveness of microfinance today.

Anjugam M. & Ramasany C. (2007) studied that microfinance has brought considerable improvement in decision making skills

among women, gave them confidence in managing the financial crisis of the family, decision making capacity in household

matters and assertiveness in protesting against social evils like drinking water problem, dowry and gambling etc.

Sengupta R. & Aubuchon C. (2008) had focused on achievement made by Prof. Muhammad Yunus and the Grameen Bank for

their efforts to create economic and social development from below. Their article was intended as a non-technical overview on the

growth and development of microcredit and microfinance. The Grameen bank and its achievement were reviewed. Paper also

emphasized on the group-lending mode of granting microfinance and it is benefit. Paper also reviewed the microfinance in

different economies and its future.

S. No. Indicators of

Empowerment

Sub-indicators of Empowerment

A

Indicators of

Power elements

Ability to take decision at the household

Savings decision level.

Reduction in expenses.

Invest more in Children‘s education decision.

Able to deal with financial crisis of the family.

Ability to control source of power

Complete ownership of resources.

Able to work together as women without the difference of caste & religion.

Ability to challenge societal power relation

Moving independently.

Able to discuss freely with bankers.

Involvement with society function.

B

Indicators

of building

of awareness

and capability

Ability to participated in non-family group

Resolution of inter and intra household conflict.

Expression of views in family.

Action to bring gender equality

Moving independently.

Participation in activities outside home.

Interaction with bankers, Govt. officers and non-Governmental Organizations.

Husband cooking during emergency.

Legal and political awareness

Women‘s participated in gram sabha meeting.

Participated in voting.

Knowledge diffusion on basic civil rights and their protection.

Mobilization on local issues.

Participated in local government electorate.

Participation in election as contestants.

Ability to manage Productive resources

Mobility of female labor.

Increase female employment in non- traditional activity.

Exchange of market information & ideas through women.





Mummidi T. (2009) discussed in her paper that women should entitled the work with the utilization of resources through MFI.

Along with this, how efficiently they utilize resources has also been discussed. The paper suggests that a better understanding of

the diversity of women‘s livelihood and a better understanding of the range of constraints, motivations, skills and capabilities of

women through the livelihood framework might help to understand the impact of microfinance. The limitation, however, lies in

the broad scope of this framework making it difficult to operationalise. This paper was a narrow demonstration of this difficult

possibility.

METHODOLOGY OF RESEARCH

Problem Statement

The study was undertaken in Haldharu to assess the role of microfinance Empowerment.

Research Design

Descriptive research design because when the researcher is interested in knowing the characteristics of certain group such as age,

sex, education, level or income.

Research Objective

Primary Objective: The role of microfinance in empowerment: The case study of bank of Baroda at Haldharu region.

Secondary Objectives

To increase the growth of people through microfinance empowerment.

To understand microfinance as a supporting tool for empowerment.

To understand why people to be targeted as potential clients for microfinance and how is influencing.

To promote self-sufficiency and economic development among people.

They help the poor to gain economic and social empowerment. Increased asset creation and savings, higher employment and

improved social lives of members are the benefits to the members.

To provide a range of quality, affordable financial services in a sustainable manner to the low income families through Self Help

Groups, for their socio-economic empowerment.

Data Collection Method

It is a term used to describe a process of preparing and collecting data. There are two sources of data collection method:

Primary data through survey in Haldharu region.

Secondary data from Bank of Baroda, which is situated in Haldharu.

Sample Size: A sample of 50 respondents from the different location is taken from Haldharu.

Analysis of data: Mean, Standard deviation, Liker scales are used the analysis of data.

LIMITATIONS OF STUDY

To inadequate measures of variables, loss or lake of participant, small sample size, errors in measurement and other

factor typically related to data collection and analysis.

The extra ordinary rate of illiteracy in community was a major problem for the research.

Lake of cooperation from the people as well as the microfinance institution because of competition.

Lack of security in holding and storing money.

Making the choice of business difficult.

Lack of financial literacy among members - with respect to timely repayment.





DATA ANALYSIS AND INTERPRETATION

Indicator of Power Element

Table-2


Indicator of Building of Awareness and Capability

Table-3


Findings: From the analysis following mean findings are drawn:

Section A: Indicators of Power Element

Table-4

No. Indicators Mean

1 Ability to take decision at a household 2.24

2 Ability to control source of power 2.22

3 Ability to control source of power 2.63


S. No. Empowerment Variables Mean Std. Dev. Rank

Indictors

of Power

Elements

(A) Ability to take decision at the household 2.24 2

Savings decision level. 2.24 1.286666

Reduction in expenses. 2.32 1.236189

Invest more in Children‘s Education decision. 2.46 1.417241

Able to deal with financial Crisis of the family. 1.94 0.977502

(B) Ability to control source of power 2.22 3

Complete ownership of the resources. 2.46 1.486813

Able to work together as women without the different

of the caste & religion.

1.98 1.059264

(C) Ability to challenge societal power relation 2.63 1

Moving independently. 2.46 1.296935

Able to discuss freely with bankers. 3.18 1.100835

Indicators

of Building

of Awareness

and

Capability

(A) Ability to Participated in Non-Family Group 2.15 3

Resolution of inter and intra household conflict. 1.74 0.664247

Expression of views in family. 2.56 1.248019

(B) Action to bring gender equality 2.45 2

Moving independently. 2.46 1.312577

Participation in activities outside home. 2.5 1.297564

Interaction with bankers, government officers and non-

governmental organizations.

3.34

0.871546

Husband cooking during Emergency. 1.48 1.728985

(C) Legal and political Awareness 2.47 1

Women‘s participated in Gram sabha meeting. 2.82 1.480347

Participated in voting. 1.28 0.496518

Knowledge diffusion on basic civil rights and their protection. 2.36 1.453497

Mobilization on local Issues. 2.18 1.521144

Participated in local Government electorate. 2.76 1.546028

Participation in election As contestants. 3.44 1.402039

(D) Ability to manage Productive resources 1.94 4

Mobility of female labor. 1.6 1.010153

Increase female Employment in non-Traditional activity. 1.8 0.968904

Exchange of market Information & ideas Through women. 2.42 1.566095





It is observed from the above table, it is seen that indicators of ―power‖ element includes the variables of ability to take decision at

household, Ability to control source of power and ability to challenge societal power relation in which the third variable ability to

challenge societal power relation ranks first followed by indicators of power element. So it is more impact on ability to challenge

societal power relation indicators and less impact on ability to take decision at the household variables. However, impacts on the

different variables are self-explanatory from their individual mean.

Section B: Indicators of Building of Awareness and Capability

Table-5

No. Indicators Mean

1 Ability to participated in non-family group 2.15

2 Action to bring gender equality 2.45

3 Legal and political awareness 2.47

4 Ability to manage Productive resources 1.94


It is observed from the above table it is seen that indicators of building of awareness and capability element includes the variables

of ability to participated in non-family group, action to bring gender equality, legal and political awareness and ability to manage

productive resources in which third variables legal and political awareness ranks first followed by indicators of building of

awareness and capability element. Therefore, it is more impact on legal and political awareness variable and less impact on ability

to manage productive resources. However, impacts on the different variables are self-explanatory from their individual mean.

CONCLUSION

It is observed from the above table, it is seen that indicators of ―power‖ element includes the variables of ability to take decision at

household, Ability to control source of power and ability to challenge societal power relation in which the third variable ability to

challenge societal power relation ranks first followed by indicators of power element. Therefore, it is more impact on ability to

challenge societal power relation indicators and less impact on ability to take decision at the household variables. However,

impacts on the different variables are self-explanatory from their individual mean and standard deviation. It is observed from the

above table it is seen that indicators of building of awareness and capability element includes the variables of ability to

participated in non-family group, action to bring gender equality, legal and political awareness and ability to manage productive

resources in which third variables legal and political awareness ranks first followed by indicators of building of awareness and

capability element. Therefore, it is more impact on legal and political awareness variable and less impact on ability to manage

productive resources. However, impacts on the different variables are self-explanatory from their individual mean and standard

deviation.

RECOMMENDATIONS

Considering the findings of the study and if the quality of the SHGs is taken into care, the role of SHGs towards empowerment

will undoubtedly improve. The following suggestions are prescribed in this connection:

Training in legal literacy, rights and gender awareness are important complements to micro-credit for the empowerment

of women. The members should be given necessary training and guidance for the successful operation of the group.

Meetings and Seminars may be organized where the members will get a chance to exchange their views and be able to

develop their group strength by interactions.

Steps needs to be ensured that the promoter and donor must come forwarded to provide skill development and training

to the members. Constant monitoring and collection of feedback from member SHGs is quite necessary.

Federation and joint liability groups of SHG functioning needs to promote.

The members of the SHG should be more active, enthusiastic and dynamic to mobilize their savings by group actions.

In this process, NGOs should act as a facilitator and motivator.

Marketing facilities for the sale of products of SHG may be created.

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